My family consisting of my wife, 7 year old daughter, 20 month old toddler and myself were invited to dinner by a couple we met recently. While we were there the host said that the toddler interacted with their record player which was easily accessible by the little boy and the host said that it caused a crack on the device. While were were still in their home the host said not to worry that it was not a problem. The following day the host wife called my wife and said that her husband wants us to compensate them for the repairs of the device.

Are we liable? What should be our answer to them?

Whether or not you pay them really is up to you. They may file a small claims suit against you, but as to if you are liable, that really would be up to a judge. They may also just forget about the whole thing if you don't pay them since most courts require a filing fee.